Patents

This information has been taken from:

THOMAS, John R. (2014) Compulsory Licensing of Patented Inventions. CRS – Congressional Research Service. Available in: https://www.ipmall.info/sites/default/files/hosted_resources/crs/R43266_140114.pdf

The Title 35 of the US Code does not include a general compulsory licensing provision. However, a series of circumstances must be taken on account when addressing the US Compulsory Licensing Regime.

On one hand, the United States is a member of the Convention of Paris for the protection of Industrial Property, and a party of the Agreement on Trade-Related Aspects of Intellectual Property Rights (for being a member of the World Trade Organization). Both of these international multilateral agreements address compulsory patent licenses.

On the other hand, other domestic laws include provisions that allow for the compulsory licensing of patented inventions and, additionally, circumstances similar to a compulsory license may occur through judicial determinations in patent infringement, antitrust enforcement and activities of federal government.

Domestic laws:

The dispositions that allow for the compulsory licensing of patented inventions are:

• The Atomic Energy Act: the Nuclear Regulatory Commision may, after giving the patent owner an opportunity for a hearing, declare any patent to be affected with the public interest if the invention or discovery covered by the patent is of primary importance in the production or utilization of special nuclear material or atomic energy and the licensing of such invention or discovery under this section is of primary importance to effectuate the policies and purposes tending to develop and control atomic energy.
• The Clean Air Act: after the certification of the Attorney General, a district court of the United States may issue an order requiring the licensing of a patent when its use is necessary to comply with the implementation of the requirements mentioned in the standards of performance for new stationary sources, hazardous air pollutants or emission standards for new motor vehicles or new motor vehicle engines; there are no reasonable alternative methods to accomplish such purpose and that the unavailability of such right may result in a substantial lessening of competition or tendency to create a monopoly in any line of commerce in any section of the country.
• The Plant Variety Protection Act: the competent authority may declare a protected variety open to use on a basis of equitable remuneration to the owner, not less than a reasonable royalty, when it is determined that such declaration is necessary in order to insure an adequate supply of fiber, food, or feed in the United States and that the owner is unable to supply the public needs for the variety at a price which may be reasonably be deemed fair.

However, those dispositions have never been invoked. Some commentators consider that the threat of a compulsory license may induce the grant of contractual licenses on reasonable terms. (PERICLES LADAS, Stephen. (1975) Patents, Trademarks and Related Rights: National and International Protection. Cambridge, Massachusetts: Harvard University Press).

Dispositions similar to Compulsory Licensing:

Antitrust Enforcement:

The enforcement of antitrust laws may end up in a patent owner agreeing to license its patents to competitors or being compelled to do so.

The “march-in right” of the Bayh-Dole Act:

The “march-in right” contained in the Bayh-Dole Act allows the funding agency to grant additional licenses to other responsible applicants for patents made using federal funding.

The license can be nonexclusive, partially exclusive or exclusive in any field, upon terms that are reasonable under the circumstances and only where the contractor:

• Has not taken, or is not expected to take, effective steps to achieve practical application of the invention;
• Has not reasonably satisfied health and safety needs;
• Has not met requirements for public use specified by Federal regulations; or
• Has granted an exclusive right to use the patented invention to another without obtaining the promise that the invention will be manufactured substantially in the United States.

Judicial Denial of Injunction:

Before the ruling in the case eBay Inc. v. MercExchange, LLC, courts used to issue an injunction, for the infringer to stop using the patented invention.

Under the eBay ruling, however, courts must weigh equitable factors to determine if an injunction should issue, such as:

• Whether the patent proprietor suffered an irreparable injury;
• The award of damages would be inadequate to compensate for that injury;
• Considering the balance of hardships between the patent owner and the infringer, an injunction is warranted; and
• The public interest would not be disserved by a permanent injunction.

In most of the cases, courts often award an injunction to the prevailing patentee, but they can decline to do so where (i) the patent owner does not commercialize the claimed invention, where (ii) the patented invention forms a small component of a larger product, and where (iii) the patent owner had liberally licensed its patented invention to others.

In such cases, the adjudicated infringer may continue to practise the patented invention, but usually must pay a royalty to the patent proprietor until the term of the patent expires. This has been called an “ongoing royalty”, which theoretically differs from a compulsory license because it is adjudicated to a specific infringer, but whose effects are very similar in practice.

Uses by the US Government:

As a general principle, the government possesses the power to take private property for public use, and it could potentially apply to Intellectual Property rights.

In fact, Title 28, in its section 1498, establishes the procedure to be followed in case that the Government makes or uses a protected invention. 28 USC §1498 (a) states that:

“Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture”.